Question

The effective rate of interest corresponding to a nominal rate 3% p.a payable half yearly is
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Answer 1

Answer:

Step-by-step explanation:

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Answer 2

Given, R = 3%

Solution,

R=3%

Interest paid 2 times in an year

Then I = R|K = 3|2 %=1.5%=0.015

By the formula

E=(1+i)^n

=> E= (1+0.015)^2 -1

=> E= (1.015)^2 -1

=> E= 1.03025 -1 = 0.03025

                           = 3.025%

       Therefore, The effective rate of interest corresponding to a nominal rate of  3% p.a payable half-yearly is 3.025%.